Friday, November 20, 2009

A Note on Maintenance of Effort

One of the points made by Blair Lee in his must-read column on the state's Maintenance of Effort (MOE) law for school funding is that Montgomery County has been paying well in excess of the state's requirements for education funding for many years. Lee is right about this in a very big way and here is the evidence supporting his view.

The Maryland Legislative Information Services' website contains the following data on above-MOE expenditures since Fiscal Year 2003. Effectively, these are the amounts by which each county has exceeded its prior year's local funding for public schools.

Montgomery County has contributed $420 million more to its schools than has been required by the state's MOE law since FY 2003. That is more than double second-ranked Anne Arundel County ($177 million) and more than triple third-ranked Howard County ($133 million). The state gives no credit to Montgomery County for its historical generosity to its public schools. In fact, the law works in just the opposite way: each year's bountiful school budget becomes next year's floor. As Council Member Marc Elrich says, the clear incentive for each county is to spend as little as possible to meet MOE requirements so that the law does not handcuff its budget in a bad year.

The MOE law is full of perverse incentives and desperately needs to be reformed.